Do you have a dream of buying a house? Whether you are trying to reach that dream or simply tired of renting, you can start to save money for a house.
House and apartment rental rates continue to rise, and you need to have more space for the family. Saving up to buy your first house is hard, but you can learn how to make it possible. Before you start saving, read the following steps to save money for a house.
7 Steps to Save Money for A House
Who doesn’t want to buy a house? Everybody has that dream, but not all people can make it come true. Trying to save money without having the right plan will not get you anywhere.
If you can’t pay cash for your home, you can start by making a simple plan below.
1. Choosing the House
Yes, you need it!
House price depends on many factors. They may include location, home size and usable space, age, condition, and other economic indicators.
Don’t wait to research home prices in a particular area where you want to live. A house in Fort Worth, Texas, may cost much cheaper than one in Los Angeles. After all, you need to know the house’s affordability.
2. Make It Real, Calculate the Down Payment
After you predict the price of the house you want to buy, it’s time to calculate everything.
Start with the down payment. You have a lot of options on how much you will spend on the down payment. The more money you invest, the less you will have to pay on the mortgage monthly after signing the paper.
I recommend you prepare at least 20% of the house price for a down payment. By paying this much, you can avoid an extra fee called PMI (Private Mortgage Insurance).
Even so, if you cannot put 20%, make sure you don’t decide to pay less than 10%. Although many land lenders or banks offer 3% or even zero down payment, you will feel so hard in paying all the interest and extra fees in the future.
3. Set Up Your Saving Goal
Now you have decided the amount of the down payment. Set your saving goal. How much do you need to save each month?
Begin by deciding how long you are going to save for the down payment. Calculate how much money that you need to put in to reach the amount by the deadline that you make.
4. Where and How to Save the Money?
Now you may ask, where should I keep my money while saving for a house?
The first rule, you should have a separate saving account to save your money. If you use an account that you often use for daily transactions, you will always be tempted to use it. You may also think about making a deposit in the bank.
5. Evaluate Your Expenses
Evaluate your expenses. How much do you spend on things that you want but don’t really need? Cut the unnecessary expenses.
But how to save money for a house while renting? Many people do this. All you have to do is count the rental fee as monthly expenses.
6. Temporary Stop Investing, Focus on the Down Payment
You might have invested some money now, and that’s ok. However, you can stop making new investments for a while. Focus on saving money for the down payment.
After getting all the money for a down payment, you can continue making investments.
7. Find Ways to Boost Your Income
You have cut many expenses, but reaching a certain amount of money seems impossible. The best way to save money for a house if you have this condition is by finding a way to boost your income.
Find a second job or use your skills to create something and sell it. If you love teaching kids, you can start opening a class at home. Manage your time wisely to increase your income.
After Signing the Paper, Now What?
If you finally manage to sign the paper, your struggle does not stop there. After all, living a debt-free life is worth wishing. You should make sure you can pay the monthly mortgage payments on time and pay them off earlier.
Wrapping it up, you need to research the price of the house that you want to buy. Decide how much you will put on as a down payment and how long you will save money for it. After that, you can start saving.
Learning how to save money for a house from now will give you more benefits in planning your future. Are you ready to have savings for your first house?